5 steps you can take to stop employee theft

Employee theft accounts for approximately 43 percent of total retailer losses.

Whether bundling countless layers of clothes under oversize jackets or hiding merchandise in the depths of stock rooms, small business retail employees are getting creative on how they can deceive their employers under the radar. As a small business owner or manager, it’s critical to set protocols, properly train employees and involve them in protecting inventory and assets from theft.

A number of cost-effective methods and procedures can be implemented to hold employees accountable and help monitor for suspicious activities.

Employee theft accounts for approximately 43 percent of total retailer losses, while customer shoplifting only accounts for 35 percent, according to the 2012 National Retail Security Survey. Without proper loss prevention measures, internal theft often goes undetected and may result in a devastating increase in inventory shrinkage.

Proactive steps can be taken to pinpoint and address potential risks that make your business vulnerable to theft. Here are a few measures to safeguard your small business:

Higher Pay, Lower Theft: A recent study from the University of Illinois and University of Southern California found that managers who compensate their employees with relatively higher wages may attract a higher proportion of honest workers. Thus, small business employees who receive fair compensation will be more agreeable and may voluntarily help monitor for signs of theft. Conversations about payment should be transparent and addressed immediately to ensure employees feel valued.

Encourage Transparency with Your Employees: Making the team accountable encourages collaboration and awareness. Highlight vulnerable areas to your employees and inform them that there will never be repercussions for reporting a theft. It is also important to share a written statement of key policies and procedures and have employees acknowledge receipt by their signature. Additionally, small business owners should adhere to these policies and report employee theft to the proper authorities as appropriate. In fact, while 64 percent of small businesses have experienced employee theft, only 16 percent of those reported the incident to police, according to research from the University of Cincinnati.

Notice the Warning Signs: A few indicators of high-risk employees include those who live beyond their financial means, habitually violate company policies or may have a cause to feel wronged. These are not absolute guidelines, but it is a best practice to take notice when one employee exhibits these behaviors.

Video Surveillance: In addition to documenting suspicious activity and crime, video surveillance can also provide visibility to monitor multiple locations from a single point and even record clips if needed for reference at a later time. The presence of video surveillance alone can also help discourage both employee and customer theft.

Card Access Controls: Installing card access controls that manage a business’s entrances and exits allow small business owners to monitor employee activity as they come and go. This measure is safer than traditional keys as access cards are harder to duplicate. Additionally, any access systems record logs to provide owners with a record of the time and date employees entered areas of the store, which is particularly helpful in keeping high-priced inventory safe.

By implementing these strategies, small business owners can have greater success in preventing employee theft and managing incidents that may arise throughout the business – from the front door to the back stockroom.

Luis Orbegoso is President of ADT Small Business, where he develops and executes the company’s strategy for providing security solutions for small business owners.

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